Thursday, August 9, 2007



A 2-Pager by Ajit Chaudhuri: August 2007

Regime changes are rarely pleasant – ask the Iraqis and Afghans. This applies in organisations as well – a change of Big Boss has consequences for those down the line. Especially so for those directly reporting to her/him, but please do not feel that you will be spared the reverberations by virtue of being lower down the organisational food chain. Your career will now depend upon the views of a person you may not know, and your history of success and failures may not count for much. Stories of what happens to executive teams during CEO transitions are not comforting – firings, cancelled strategies, organisational reshuffles, and abrupt and unwelcome career changes for senior managers.

So if you are not working for an African dictatorship or a local NGO, chances are that you will have to survive a regime change or two in the course of your career. At these times, you will be faced with three questions – how worried should I be, what will happen to me if I get pushed out, and how do I maximise my chances of prospering under the new Big Boss. A recent article in the HBR entitled “Surviving Your New CEO” [1] has some answers pertaining to managers in large firms in the US. Despite difficulties in translating the implications to the Indian scenario, there are some interesting pointers to those of us who are facing, will face, or have faced a regime change. Please read on!

How worried should you be? Very worried! A typical firm has a 16 percent turnover of managers every year, of which 8.5 percent is voluntary (retirement, or health/family issues) and 7.5 percent is involuntary (including firings and unplanned early retirements). When a new CEO is in place and has been promoted internally, involuntary turnover increases to 12.5 percent and combined turnover is about 1 in 5. When a new CEO has been brought in from outside, involuntary turnover increases to 24 percent in mid and 31 percent in poor performing firms. To put it bluntly, if you are a senior manager in a sub-par performing firm, you have a 40 percent chance of leaving if the CEO changes and a new one has been brought from outside.

What will happen if you get pushed out? Some people think that losing their job would be the best thing that could happen to them – they could get out of the rat race and do all those things they’ve been dying to do; spend more time with the kids, explore an alternative career, shift to the rural wilderness, write a book, whatever. Such transformations are rarely successful. Competent people also assume that, if they are asked to leave, they will find a better or at least equal job elsewhere – and they are relaxed about their fate under their new Big Boss. Beware! The data does not support this optimistic outlook. Only 4 percent of managers leaving due to a regime change get a better job, and another 28 percent experience lateral movement. Only 3 percent accept significantly worse jobs in similar-sized firms. 22 percent leave to join a much smaller firm or start a small business of their own, and 43 percent disappear from the source database altogether (a euphemism, I suspect, for ending their careers). Given these outcomes, sweetening up the new Big Boss is an advisable strategy.

How to prosper under a new CEO? New CEOs have certain characteristics. They are under tremendous pressure, as their own survival on the job is heavily dependent upon the firm’s performance in their first year. They therefore tend to make people decisions quickly, even when they have publicly vowed to take their time. They do not seek inputs from their predecessors, and place little weight on the inputs that they do receive – so do not expect your good relationship with the ex-Big Boss and the professional respect s/he accorded you to continue on momentum. They tend to rely on their instincts, and early impressions count significantly. And finally, they tend not to have restrictions from their Boards on changing management teams. Assuming no force majeure that makes your exit inevitable (you are a CFO and the new CEO brings his/her own CFO, for example), a good first impression is critical to your chances of survival and success.

The authors have interviewed successful CEOs and asked them to look back at the earliest days of their new jobs – what did executives do to turn negative impressions into positive ones? Did otherwise smart people do, or fail to do, something that brought about their downfall? Here is a summary of their recommendations.
1. Show your goodwill
a. It may be tempting to adopt a wait and see policy rather than taking the initiative to talk about your role and responsibilities with the new CEO, but many executives doomed themselves by failing to demonstrate eagerness and willingness to be part of the new team early.
b. It is dangerous to assume that your new CEO already understands that you want to cooperate. Those who oppose the new agenda do not announce their opposition, and new leaders do not equate silence with agreement.
c. If you plan to stay on, let the new CEO know proactively but without being sycophantic, and follow up with actions that demonstrate your willingness.
2. Leave your baggage at the door
a. Do not talk about salary issues, even if you were grossly mistreated by the previous regime. The new CEO does not want to deal with these as yet.
b. Do not talk about your own long term plans with the firm. The new CEO has not yet decided whether you still have a career here.
c. Do not raise issues of difficulties you are having with your colleagues.
d. Get your spouse to be diplomatic – anything s/he says will filter back and be construed as a reflection of your real views.
3. Study the new CEO’s working style – how approachable and participatory s/he is in functioning, how comfortable s/he is with dissent, how rigid s/he is on ethical or behavioural matters, etc. Opinions are divided on whether you should contact your counterparts in the new CEO’s former division or firm to enquire into these matters.
4. Understand the new CEO’s agenda. S/he is under tremendous pressure to perform. 75 percent of new CEOs whose stock performance rose in their first year of tenure were still in place two years later, and 83 percent whose stock fell were gone by that time. S/he will be looking for constructive suggestions and realistic and honest game plans. Offer objective options and explanations, and do not come across as self-serving.
5. Be on your ‘A’ game
a. Show positive results, and soon! You cannot afford to let things slip into paralysis because of confusion caused by the regime change. It is critical to demonstrate that you are active and competent.
b. Show political awareness during the ‘honeymoon weeks’. Do not assume that you are invaluable – be available to the new Big Boss, and cancel that long-planned vacation if it coincides with his/her joining. S/he will not have the time to coach you or even to warn you that you are going wrong.

To conclude: Regime changes are stressful for everyone. The danger of being pushed out is real, and the difficulty of landing on your feet is severe. However, opportunities to invigorate your career are real too; others find fulfilment away from the professional world. You need to make your own decision as to whether the new Big Boss’s style, vision and business practices are ones you want to live with. Then commit or get out! Otherwise, everyone’s life will be hell – and the result will be the same anyway.

CEO Chief Executive Officer
HBR Harvard Business Review
NGO Non-Governmental Organisation
[1] “Surviving Your New CEO”, Kevin and Edward Coyne, HBR of May 2007.


Anonymous said...

I was pleased to read the conclusion to your article. Till then, there seemed to be an undertone of being at the whim and fancy of some bigger bolder power- as much as one wants to make the right impression and get on the right side of ones new boss, I don't think it is entirely a oneway street. Beyond a point, getting out and looking for people who value you, is always an option.

Apoplexy said...

This is Ajit Chaudhuri of Katakol?

Ajit Chaudhuri said...

Hi Apoplexy, and no, not from Kolkata.

And many thanks, Nitasha!

With best wishes to both of you,